How Profitable are Auto Repair Shops

posted on May 10, 2018

Barely breaking even is NOT the goal!

Back in the good old days, the owner of an auto repair shop would track every expense, bill, employee hour worked, and everything else, on paper. He would give all the bills to his book keeper and they would manually enter it all into a ledger or a accounting system and then tell you if you were making money or not. In reality most owners measured success on how much cash they had left in their pocket at the close of business Friday.

Prices for parts, utility bills, taxes, insurance, and the like, were all predictable, parts prices didn’t increase every time you called the local parts store (which it can feel like now). An auto shop owner had a good idea of how things were going without ever looking at the books.

Welcome to the 21st Century. Cars last longer between repairs, we have a whole age group who shop on price alone and don’t care about building a relationship with a repair shop, everything is being compared and checked online. No one seems to be willing to leave their car with you a moment longer than they feel is necessary, and they want instant communication.

Auto parts have become a competitive marketplace, thanks to online businesses coming in and disrupting the normal practices of just buying from whatever local store has the item you want, parts prices can change very quickly (and unpredictably). Utility bills can now include Internet access, VOIP phone service, and more. Shopping around can save your business money on just about everything, but don’t forget while you are shopping around, so are your customers.

Perhaps most importantly, bookkeeping has become automated, which means your accountant may need something more than your back-of-the-envelope figures of your monthly expenses. The question becomes, “Is your business stuck in the 20th Century?”

Software Will Help Make You Profitable

The fact of the matter is, shops that use management software are more profitable than ones that still handwrite everything. How do they help make you profitable?

Record Keeping You, as a business owner, can’t be assured everything you wrote down got included into your books properly. What happens if you simply forget an expense that you paid for in cash, maybe you didn’t get a receipt. What if your book keeper misreads your hand-written RO and enters the wrong amounts. For another, basic bookkeeping doesn’t take your business to the next level, in terms of measuring your profitability on each job and each repair order.

Measure Everything You can’t improve what you can’t measure. You can’t improve what you can’t integrate into a coherent picture. The plain fact of the matter is that what can be measured can be managed.

As an example, suppose you track employee hours with a timeclock and timecards – the old-fashioned kind. You can tell when someone is late in, or leaves early, but did they get the brake job done in the time you quoted? How difficult would it be for you ferret out which employees are very productive, and which are taking too long to do a given job? With auto shop software, that kind of analysis comes at the push of a button, rather than time spent by you or your bookkeeper scribbling down those figures.

Check Prices Here’s another example: auto parts prices. You can call every shop in town looking for a part or go online and plow through the figures yourself on each of their websites.

With software you can see all the shops you use, their stock levels and prices in one place, or put a database of current prices into your repair shop software that’s as current as today. There’s no sense in doing things manually, every phone call to a shop sucks 10-15 minutes out of your working day, when parts integrations built into your RO writing software can give you the right answer, the first time, without you having to write a single thing.

Profit Per Hour Auto shop owners have always looked at Profit as a weekly, quarterly or even annual number. Your profits are earned hour by hour, every hour that you are paying your technicians should be returning a profit to the company. Trying to work it all out manually is next to impossible, which is why a PPH indicator is built into Auto Shop Software by Profitboost, every job shows whether you are hitting the Profit Per Hour target or not. This indicator makes it easy for your service writer to increase your estimates until they are meeting your preset target.

How profitable is your business right now? How much real profit are you making on each Transmission service, or on the water pump replacement? Can you improve your bottom line just by a few tweaks and adjustments to the way you do business now? How would you know that without calling your book keeper and having them run some reports for you?

PIFPro Automotive Repair Shop Software can do that for you. It’s better than a program you install on a computer – it’s ‘cloud-based’, which means you can access it from PC & Mac platforms, including desktops, laptops, Ipads, tablets, and smartphones from Apple, Android, and Microsoft via the Internet. Best of all, you have complete control over who has access to your account. Your employees can use it for its timeclock function, your service writer can use it to create accurate estimates in minutes, while only you have access to the business end of your auto repair shop software.

Take the next step into the 21st Century, and put away the pencil and paper. Get PIFPro Automotive Repair Shop Software.